In 2011 Adrian Griffin was appointed CEO of Lithium Australia NL (ASX:LIT). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Adrian Griffin's Compensation Compare With Similar Sized Companies?
Our data indicates that Lithium Australia NL is worth AU$24m, and total annual CEO compensation was reported as AU$635k for the year to June 2019. That's actually a decrease on the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$352k. We looked at a group of companies with market capitalizations under AU$295m, and the median CEO total compensation was AU$375k.
It would therefore appear that Lithium Australia NL pays Adrian Griffin more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Lithium Australia, below.
Is Lithium Australia NL Growing?
On average over the last three years, Lithium Australia NL has shrunk earnings per share by 33% each year (measured with a line of best fit). In the last year, its revenue is up 109%.
The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Lithium Australia NL Been A Good Investment?
With a three year total loss of 77%, Lithium Australia NL would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Lithium Australia NL with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. Shareholders may want to check for free if Lithium Australia insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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